Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year. To receive a normal profit, the firm described above would have to
A. Earn $10,000 more in revenue.
B. Experience $10,000 less in cost.
C. Earn $90,000 more in revenue.
D. Do nothing since it already earns a normal profit.
Answer: C
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